PrintOctober 6, 2008
NYT obscures blame for financial crisis
A New York Times article today tries to spread the blame for the current financial crisis equally among Wall Street, Congress and the "White House". This blurring of responsibility is shameful. Much of the blame, as we now know, lies with Congress, particularly Democrat members of Congress who compelled Fannie Mae and Freddie Mac to lower their standards of risk to exponentially increase loans to the disadvantaged. Those efforts are the root of this crisis.
The article places much of the blames on Wall Street pressure on Fannie Mae and Freddie Mac to stamp high-risk loans with an insured rating, facilitating their sale through Wall Street titans.
This is ridiculous.
If Congress did not authorize and pressure Fannie and Freddie to buy this toxic waste, they would not have done so. Fannie and Freddie should have withstood pressure from "Wall Street." The Street does not control the guidelines for these Government-sponsored entities. Congress does.
By the way, we should note how the reporters just write about the "White House". Which White House? The one occupied by George Bush? Or the one occupied by Bill Clinton? Or Jimmy Carter?
Just reading the article one would naturally conclude that it was the Bush White House that played a role in the crisis. In reality we know Bush and many Republicans, including John McCain, warned about the risks and tried to get a handle on the situation years before it became a crisis. Their efforts were stymied primarily by Democrat Congressmen.
Also, we know it was the Clinton White House that played a key role in causing the crisis, by their efforts to strengthen the requirements of the Community Reinvestment Act (originally signed into law by another Democrat President, Jimmy Carter) that banks expand loans to previously unqualified borrowers, who have now defaulted on their mortgages. Nowhere in the article is the Community Reinvestment Act mentioned -- yet that is the founding document of this crisis.
Readers would not know about the Democrat Presidents role in this crisis.
